Review Begins on Expanding Price Cuts for Pharmaceuticals and Medical Devices with Increased Costs but No Additional Benefit – Chuikyo

News Highlights

The Central Social Insurance Medical Council (Chuiikyo) has begun deliberations on expanding price reductions for pharmaceuticals and medical devices that lead to increased costs without recognized additional benefits. While similar discussions took place during the FY2024 medical fee revision, this may lead to a more in-depth review. This could impact the revenue structure of medical institutions, increasing the importance of mid-to-long-term management and business succession strategies.

M&A Medical Editorial Perspective

This consideration for price reductions on pharmaceuticals and medical devices that are “costly without additional benefit,” in other words, “less effective yet expensive,” suggests a further shift in medical fee revision discussions towards healthcare economics. In particular, the trend towards promoting the use of generic drugs and the appropriate use of medical devices could directly pressure the profitability of individual medical institutions. For example, lease fees and consumable costs for certain high-priced medical devices carry the risk of future revisions. Under such circumstances, participation in a group that can benefit from economies of scale, joint purchasing through regional cooperation, or even transitioning to a specific medical corporation or social medical corporation, considering tax benefits, will emerge as more realistic options for business succession and restructuring schemes. It is essential to have a management strategy that incorporates these systemic change risks, not just measures for successor absence.

Points Indicated by This News

• Expanding price cuts for pharmaceuticals and devices with “increased costs” will directly affect the cost structure of medical institutions.
• The trend of emphasizing “healthcare economics” in medical fee revisions is likely to accelerate further.
• Medical institutions highly dependent on expensive pharmaceuticals and medical devices will be most significantly impacted in terms of profitability.
• Mid-to-long-term management and business succession strategies that consider systemic change risks will become more crucial.

Practical Questions Arising from This News

• Specifically, what types of pharmaceuticals and medical devices will be targeted, and what level of price reduction can be expected?
• Is there a possibility that pharmaceuticals and medical devices currently used by our institution will be subject to price reductions in the future?
• What specific management strategies should be developed to prepare for such systemic changes?

If You Feel “Should I Consult?”

It is advisable to conduct an inventory to assess whether the cost structure of pharmaceuticals and medical devices used by your institution carries the risk of future fluctuations due to the current deliberations by Chuiikyo. This is particularly true if your institution relies on high-priced pharmaceuticals or medical devices with specific functions, as this could significantly impact profitability. It is an excellent opportunity to consult with experts on how to incorporate systemic change risks into your institution’s management and business succession strategies, while closely monitoring trends in medical fee revisions.

M&A Medical (CentralMedience Inc.) supports the business succession of medical corporations, hospitals, and clinics as an M&A support institution certified by the Small and Medium Enterprise Agency, with a full success fee basis. Consultations are accepted with strict confidentiality. Free consultation here